Legislature and State Budget and State Government and Taxes and Government & Economic Development and Government

Indiana Senate approves $30B budget, partial tax cut

April 9, 2013

The Indiana Senate approved a $30 billion budget Tuesday night that includes new money for several highway expansions and a package of tax cuts.

Senate Republicans crafted the plan, keeping much of the additional education spending that House Republicans added to their budget proposal in February. But the Senate package also includes a $150 million cut to personal income taxes as a nod to Gov. Mike Pence, who originally wanted a $500 million cut in the tax.

The Senate voted 38-12, with one Democrat joining all the Republicans in supporting the plan. Differences between the plan and the House's budget proposal will now be worked out by a conference committee. The House plan doesn't include the personal income tax cut, which has been the governor's key agenda item.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said the budget includes a strong balance of tax cuts to spur the economy and restoration of budget cuts sustained through the recession.

"This is what I call an opportunity budget, this is an opportunity for Indiana to move forward," he said.

Lawmakers are working with $2 billion in reserves and a $500 million surplus left by former Gov. Mitch Daniels, but they are also looking for ways to restore cuts to education and local roads that Daniels used to help keep the state above water during the recession.

The Senate budget would devote $200 million a year to expand Indiana's interstate highways. The money would pay for the construction of additional lanes on Interstate 65 and Interstate 70, as well as a further extension of Interstate 69. The budget would also help pay for the Indiana Commerce Connector, a new highway circling central Indiana from Martinsville east to Muncie.

The Senate also proposes eliminating the inheritance tax, and cutting a tax on banks and financial institutions by roughly $150 million.

Republican senators praised the additional tax cuts, but Democrats said the vast majority of money would go to a small group of the state's wealthiest individuals.

"This income tax cut as a boon to the average Hoosier is a farce," said Sen. Mark Stoops of Bloomington, noting that the poorest residents would get roughly $18 a year out of the cut.

Senate Democrats offered a series of amendments Monday aimed at expanding Medicaid, and increasing money for schools and other areas. But Republican senators, who outnumber Democrats 37-13, easily voted down those attempts.

Pence said last week he was "pleased" with the Senate's effort to give him at least some of the tax cut he has sought. House Republicans stripped the tax cut from the budget they approved in February, adding instead more money for public schools and local roads.

House Speaker Brian Bosma, R-Indianapolis, and Pence battled through much of the session over the tax cut. Pence's reception of the Senate plan was much more amenable, but he has said he would still lobby for his full tax cut.

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